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Article 9
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When a principal or the dealing department of a securities firm has sold spot securities but fails to complete an opposite purchase, the securities broker shall, on the first business day after the trade date of the sale of the spot securities, make a forced repurchase through a "special account for handling shortfalls in securities deliverable in day trading" (securities trading account number: 889999-9) set up by the broker's headquarters, for purposes of returning the securities borrowed under Articles 7 and 8. If it is unable to make a forced repurchase of the full quantity on the first business day after the trade date of the sale of the spot securities, it shall, beginning from the second business day after the trade date of the sale of the spot securities, continuously repurchase the securities until the full quantity has been repurchased. Forcibly repurchased securities shall be used, in first priority, to return securities borrowed through bidding and negotiation procedures under Article 8.
If the securities broker is unable, on the first business day after the trade date of the sale of the spot securities, to make a forced repurchase of the full quantity of the securities borrowed under Article 7, it shall notify the party that lent the securities and the principal that borrowed the securities to continue lending and borrowing the securities that have not yet been forcibly repurchased until the full quantity has been repurchased. The party that lent the securities may not request the early return of the securities. The securities lending rate shall be as provided in Article 7, paragraph 5, and shall be calculated based on the closing price on the day of the continued lending. If there is no closing price for the securities on the current day, it shall be calculated based on the auction reference price at market opening of the current trading session.
If the securities broker is unable, on the first business day after the trade date of the sale of the spot securities, to make a forced repurchase of the full quantity of the securities borrowed through bidding or negotiation procedures under Article 8, it shall continue to authorize the financial enterprise to bid or negotiate on its behalf for the borrowing of the quantity of securities not yet forcibly repurchased.
Forced repurchases under this article may be made in ordinary trading, after-hours fixed-price trading, odd-lot trading, or block trading. However, the "special account for handling shortfalls in securities deliverable in day trading" referred to in paragraph 1 may be used only to make purchases in the spot market, and may not be used to make sales. Also, an omnibus account may not be used for forced repurchases, nor may an account number correction be reported.
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